Dover at Bank of America Conference: Strategic Growth Amid Challenges

On Tuesday, 13 May 2025, Dover Corporation (NYSE:KN) presented at the Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025. The company discussed strategic growth initiatives, including a recent acquisition, while addressing challenges such as tariffs and market uncertainty. Despite some negative sentiment, Dover expressed optimism about its future performance.

Key Takeaways

• Dover acquired Secora for EUR 550 million, enhancing its Polymer Processing platform.
• The company is focusing on organic growth and smaller acquisitions amid a slow deal flow.
• Tariffs pose challenges, but Dover is effectively managing its supply chain.
• Strong growth observed in biopharma, CO2 systems, and clean energy segments.
• Dover remains optimistic about its strategic growth and operational efficiency.

Secora Acquisition

• Dover has acquired Secora, a German leader in precision measurement solutions, for EUR 550 million.
• Secora is expected to generate over EUR 100 million in revenue this year.
• The acquisition will enhance Dover’s Polymer Processing platform and offer cross-selling opportunities, especially in the wire and cable market.
• Secora’s technologies include laser, X-ray, and ultrasound for error detection in various equipment.

Capital Allocation and M&A

• Dover has invested over $1 billion, including the Secora acquisition, to expand its polymer processing capabilities.
• The company is pursuing smaller tuck-in acquisitions in growth areas.
• Organic growth through capacity, productivity, and automation investments is a priority.
• Current deal flow is slow due to macroeconomic uncertainty.

Tariffs and Supply Chain

• Dover’s revenue base in China is 5% of its total, with a cost base of 6%.
• The company plans to reshore certain product lines by the end of the year.
• While some customers consider shifting to U.S.-based suppliers, many are taking a "wait and see" approach.
• Dover’s flexible supply chain helps mitigate tariff-related challenges.

Business Segment Performance

• Biopharma: Achieved double-digit revenue growth in Q1 2025, with expectations for continued growth driven by demand.
• CO2 Systems: Global business exceeded $250 million in 2024, with U.S. sales surpassing $100 million. The segment is growing at a double-digit rate.
• Clean Energy: Anticipates above-average revenue and margin expansion, aiming for a 25% margin long-term.
• Thermal Connectors: Generated over $30 million in revenue in 2024, with strong growth expected due to data center expansion.
• Retail Fueling: Experienced a better-than-expected start to the year after previous struggles.

Future Outlook

• Dover is monitoring near-term and second-half conditions, with no significant surprises expected.
• The company remains committed to its capital expenditure guide and ongoing projects.
• Automation projects continue across segments, leveraging central capabilities.

Q&A Highlights

• Dover is managing negative sentiment and is on track with expectations.
• No significant project delays have been observed.
• The company’s North American manufacturing footprint is advantageous in responding to tariffs.
• The focus is on managing demand in response to tariff changes.

In conclusion, Dover’s presentation at the conference highlighted its strategic initiatives and challenges. Readers can refer to the full transcript for more details.

Full transcript - Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025:

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Morning. Welcome to the second session of the day. I’m Andrew Obin, BofA’s multi industrial analyst. So with us we have Dover, CFO Christopher Winker. Rich Tobin had a last minute emergency and was unable to attend.

So we learned about it over the weekend. So he sends his apologies. And we also have Jack Dickens, Senior Director of Investor Relations for the company. And I think what’s going to happen, Christopher is going to give us a short presentation and then we’re going to go into fireside chat style Q and A. Thanks so much for being here.

All right. Thanks, everyone. And yeah, we wanted to take

Christopher Winker, CFO, Dover: a couple of minutes we wouldn’t present slides. We want to take a couple of minutes just to talk about the acquisition of Secora, which we announced last week. So we’ll spend just a couple of minutes here, and then we can commence with the normal agenda. So I’ll talk a little more about the business and specificity in the following slides. But we did announce the signing of the Secora, the acquisition of Secora, which is a global leader of precision measurement solutions headquartered in Germany.

The purchase the enterprise value of the business is about EUR $550,000,000. We expect revenues to be over EUR 100,000,000 this year with a margin profile that is kind of consistent with the segment that this is in, which is Pumps and Process Solutions, and a fairly exciting growth profile, both historical and go forward. So talk a little bit more about the business. We like the complementary nature of this business to our Polymer Processing platform in our Pumps and Process Solutions segment. We like the business model.

We think it’s consistent with what we like in Dover, good technology, strong recurring revenue opportunity. And we like the end market exposure that we have through the business, both in kind of our core Polymer and Plastics business as well as some other adjacent markets, which we’ll talk

Jack Dickens, Senior Director of Investor Relations, Dover: a little bit about.

Christopher Winker, CFO, Dover: And we obviously like the financial profile and then the opportunity for synergy value side and the cost side. So I’ll take just a couple of minutes and talk about our polymer processing platform. Over the last kind of decade plus, we’ve deployed inclusive of Secur over $1,000,000,000 of capital investing behind what we believe to be kind of a leading product and technology platform in the polymer processing space, really starting back with the acquisition of MOG back in 2012. So this is a business that we believe helps kind of continue a world class product offering in this space. A little bit more about Secours itself.

So as I mentioned, this is a global leader in equipment for measurement, inspection and control technologies in the manufacturing of wire and cable, hose tube and sheet, and polymer and plastics equipment. So this is a fairly natural overlap with our business. Know Secora. We sell it to common customers. It’s a blue chip customer base.

It’s not overly concentrated. And you can see the end markets over on the right. We obviously play in those end markets with those customers, but there’s a lot of opportunity that we have from a cross selling perspective on the revenue side to kind of further penetrate into certain end markets and applications, particularly on the wire and cable end market where Secura is strong. This is an end market that is kind of positively impacted by the electrification infrastructure investments that are being made around the world. And also, just to touch quickly, we’ll see this on the following slide, but a pretty strong value proposition for the customer base.

Again, the customers of Secura are making kind of high mission critical, high cost of failure components. And so these kind of measurement and control technologies that Secura provides is critical for quality assurance, cost and efficiency and then product compliance as well. So this is just an example of some of the technologies you’ll see. They have laser, X-ray, ultrasound, among others. And then you can see on the right there, these are some of the errors in the manufacturing process that SCOR’s products are intended to detect concentric issues, nonuniformity contamination, etcetera.

So these are technologies that we’re excited about we can apply even within our existing product portfolio. So again, why is this a good fit? It’s a Dover like business model in a priority space that we’ve invested behind. It’s solid stand alone financial profile with good potential synergy upside, and it gives us an opportunity to kind of continue to leverage the central capabilities that we’ve built up in Dover through the integration.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Okay. Fabulous. Well, thanks so much. Well, Jack was kind enough to set up a visit for me. Last summer was MAG.

So, you know, you guys definitely being consistent in terms of MAG having done a good job on capital allocation. And we’ve written about it. That certainly has been a theme. So I can can testify that Secor is very much consistent with your messaging. So with that, you know, you have $1,800,000,000 in cash on the balance sheet.

So Secor only uses a third of that. So how would you judge those prospects for further M and A? And what other as I said, MAG, clearly you’ve identified it as a platform before. What other platforms inside Dover should we be thinking about? Yeah.

You know, and

Christopher Winker, CFO, Dover: and as I think about kind of capital allocation strategy as well, you know, we’re obviously focused not just on the m and a side, but also on, you know, on the organic opportunities we have within the business that we’ve typically been fairly successful on generating good returns on. So, you know, there’s a you saw, you know, Rich Rich talked about these a little bit in the earnings call a few weeks ago. We’ve got a number of capacity investments, productivity and automation investments in places that we’re investing behind the business. I would say on the m and a side, you know, we’re kind of always engaged. You know, we’re we’re engaged in some interesting conversations on a variety of different businesses.

You know, there’s always kind of the pipeline of kind of small tuck in bolt in type of opportunities that are

Jack Dickens, Senior Director of Investor Relations, Dover: out

Christopher Winker, CFO, Dover: there, you know, but we’re you know, we continue to be engaged in interesting discussions. You know, probably there’s nothing imminent of

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Oh, yeah.

Christopher Winker, CFO, Dover: Size, but there’s opportunities out there that we continue to talk about, particularly in our growth spaces.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Is there more urgency among sort of private equities, sort of just looking for exits for some of the portfolio companies? Is it notable or is it just very glacial change? I I would put

Jack Dickens, Senior Director of Investor Relations, Dover: it more in the latter. Right now, it’s in terms of like the inbound deal flow from brokered processes, it’s relatively slow. As you know, we tend to or we’d like to buy out of auction Yep. Organically. I mean, Socorro being one example.

So I think just the broader uncertainty in the macro right now is leading many private equity firms to be slow to bring their businesses to market.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Got you. Thank you. So we do have two conference wide questions that I’m going to ask and get those out of the way. So and, you know, I know Rich and the company is a believer sort of more one of the more U. S.-focused companies.

But do you expect to shift incrementally more of your own production or supply chain to The U. S? And also, do you expect your customers to source more from The US?

Christopher Winker, CFO, Dover: Yeah. I know Rich, you know, Rich spent some time talking specifically about the example that we have an engineered product in the call, in the first quarter call. So there is, you know, there’s some activity. I would say that was that was actually underway even before kind of the acceleration of some of the tariff conversation over the last several months. But we’re kinda you know, we’re we’re already fairly Right.

We’re already fairly geographically organized in our supply chain. We tend to be shorter. We tend to be flexible with those. So and as far as what we’re seeing from a customer perspective, I think it’s there’s some of that out there, but I think there is a lot of people in a little bit of a wait and see mode on

Andrew Obin, BofA Multi-Industrial Analyst, BofA: that. Okay.

Jack Dickens, Senior Director of Investor Relations, Dover: Yeah. I mean, China right now appears to be in the crosshairs, at least it was at the start of the week. I think our revenue base in China is 5% of total and it’s 6% of our cost base. So we’re not overly exposed there to begin with outside of a handful of product lines like the one that Chris mentioned in engineered products that we’re working to reshor by the end of the year.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: And customers, as you said, wait and see.

Christopher Winker, CFO, Dover: I think, yeah. I mean, I think we’re seeing some customers that are talking about things, but it is you know, it’s it’s kind of a mixed it’s a mixed bag. And we have a we obviously have distinct supply chains for our distinct businesses. So Right. It’s kind

Andrew Obin, BofA Multi-Industrial Analyst, BofA: of a mixed bag. Gotcha. And as long as I’m asking, you know, think another question we sort of had, I’ll just move it up front. Are you perhaps seeing that some of the customers looking for more U. S.-based suppliers?

Or do you think a lot of it has been taken care of by sort of Trump one point o? Yeah. I think there’s my

Christopher Winker, CFO, Dover: view is there’s still there’s a shift in that direction. I’m not sure how much of an acceleration this has provided. I mean, what we focus on is, you know, our ability to kind of service customers wherever they wherever they need to So that’s that’s part of our strategy around having a supply base that is a little more flexible and localized.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Gotcha. And maybe the tax bill, I think we finally got the full text of it this morning, but it’s expected to include bonus depreciation, domestic manufacturing incentives. Will any of these are important for you and why?

Christopher Winker, CFO, Dover: Yeah, I mean, and I haven’t, I admittedly, I haven’t had a time to kind of digest the full.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: I don’t think anybody, I’ve been like releasing dribs.

Christopher Winker, CFO, Dover: Yeah, You know, it’s, you know, if, you know, I think there’s, you know, we kind of have done the modeling on time what we believe some of the impacts will be. I’m not sure that it’s going to be, you know, from a cost perspective, I think it’s all very, very manageable at

Jack Dickens, Senior Director of Investor Relations, Dover: this point.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Gotcha. Thank you. So maybe some high level questions on the earnings call, you said we’re going to see if we can plow through negative sentiment over the next sixty five days. We’re still plowing through.

Christopher Winker, CFO, Dover: Yeah. I mean, I think, you know, I would say kind of so far so good. You know, I think we’re what forty some days into the quarter. I think we kind of feel good about where we are fairly in line with what we expect.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Have you seen anything better than expected, anything weaker than expected, and if you care to comment?

Christopher Winker, CFO, Dover: I think it’s been fair it’s honestly been fairly consistent. I mean, we remain focused not only on kind of managing the near term, but also keeping an eye to the second half. I think, you know, there’s nothing we’re seeing at this at this point in time that’s concerning beyond what we, you know, what we kinda talked about at the end of the first quarter. So I think it’s you know, we’re still monitoring very closely the near term and kind of the later second half term, but there’s nothing that’s kinda surprised us at

Andrew Obin, BofA Multi-Industrial Analyst, BofA: this point. The May and no air pocket as far as you can tell.

Christopher Winker, CFO, Dover: That’s

Jack Dickens, Senior Director of Investor Relations, Dover: yeah. We’re not allowed to use that term. But but Sorry. No. I mean, look.

In terms of, like, like, project delays, I mean, that’s that’s something that I think we hear about, but we’re not seeing it, I guess, just more anecdotally in our own businesses. That that’s not something that we’re experiencing at this time, but it’s something obviously we’re tracking.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: And you guys have not changed your CapEx, your own CapEx. Right?

Christopher Winker, CFO, Dover: No. No. We remain, yeah, committed to our guide and the projects that we’re undertaking.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: And, you know, you are strategically advantaged with your largely North American manufacturing footprint. So what’s been the most challenging part of responding to tariffs within your own supply chain?

Christopher Winker, CFO, Dover: Yeah. I mean, I think from a from a kind of cost and and p and l management perspective, we feel pretty good about our response. We are in a situation where our supply chains are manageable. We have a competitive position that gives us an opportunity to kind of make sure we can kind of manage things. I think, quite frankly, the biggest open question is outside the supply chain is really just the impact on the demand function.

And that’s that’s the piece that we, you know, continue to kind of monitor. But I would say that, obviously, the you know, we’ve we’ve seen changes this way. We’ve seen changes that way. We’ve been able to be flexible because of the structure of our supply chain because of our management teams being adept at managing their supply chains. It’s really the demand function questions that are more, you know, more

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Yeah. No. This is good. So one of the earnings slides was a chart of where you are investing and there’s some capacity expansion in some segments, some site consolidation and others. But, you know, I think what struck us is how every segment was getting capital and budget for automation projects.

So you disclosing more or is 25 and above average year for automation at Dover?

Christopher Winker, CFO, Dover: Yeah, I think this is a continuation of work that we’ve done over the last several years. I think we talked probably publicly around a fairly large automation project we did in in climate in the climate sustainability technology segment several years back that we’ve continued to see benefits from. But this has been, you know, kind of a multiyear effort to focus on kind of manufacturing automation kind of across our portfolio. The opportunities that we see aren’t isolated to one business or one segment. It’s, I think, a more broad opportunity that we’re looking to leverage across our businesses.

We’ve got a you know, some central capability around that that we’re that we’re leveraging at the Dover level to help drive that. But that’s an opportunity. I think it’s we’re probably being maybe a little more transparent with it in the slide that we showed in the first quarter, but it’s been a focus for us over the last really over the last couple of years.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: I

Jack Dickens, Senior Director of Investor Relations, Dover: would just add, I mean, cap goods pieces of the portfolio have been the biggest beneficiaries of the automation investments and the value that’s been created there, whether it’s the food retail business, automation line in Richmond on the door case side, that’s probably the biggest single CapEx project we’ve had in the last five to ten years. The waste business, right, which we sold in October of last year, had a very significant productivity and automation investment in the years preceding that. And that’s part of why they were able to double, literally double their EBITDA in the three years before we sold it. So the value creation of those investments can be pretty big.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Thank you. So maybe biopharma. I don’t know if you’ve gotten any questions on it recently, but can you describe on size your biopharma and medical businesses? Because you do have sort of palm sensors and connectors.

Christopher Winker, CFO, Dover: Yeah. Yeah. I think in ’24 was about 200 and mid-200s in terms of revenue. Obviously, we had I think we commented on our first quarter our first quarter growth rate on bio, or we we we commented in kind of our growth rate on bio in the past. We expect that we we’ve kind of ridden the wave.

You know, we we saw the COVID ride up, and then we saw the destocking coming out of COVID. I think we’re kind of settling and hope hopefully to a more normal demand pattern. We expect that to be a double digit growth business for us going forward into the future, multi years into the future. So definitely a positive first quarter. We expect it to be a tailwind this year, and we expect that double digit growth profile to continue.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: And as I said, you did have your reference double digit revenue growth in by pharma in the first quarter. Can you tell how much of this is function of just sort of comps versus comps destock? I know some of the inventory has sort of like literally expired versus just actually maybe underlying end market demand getting better.

Christopher Winker, CFO, Dover: Yeah. You know, we we actually you know, I would probably say it’s it’s less of a comp issue. We we saw growth in biopharma in ’20 in ’24 last year. You know, if you recall, even in the destocking period, we started to see those impacts before some of the other market participants that are on kind of the skid, you know, making the larger systems because we do we are we are more of kind of an ups upstream component, single use component into that into that product. So we really started to see some of this recovery last year.

So I would say it’s it’s probably less of a of a of a comp issue for us. I think it’s, you know, we’re starting to see the demand. I mean, certainly, you know, trying to bifurcate between, you know, end demand and and, you know, there’s probably some level of restocking come going on coming out of out of the trough. That’s a little bit more difficult to unpack. But, you know, we think what we’re seeing now is less of a comp issue and more of kind of fundamental demand.

I would

Jack Dickens, Senior Director of Investor Relations, Dover: just add. I mean, we we have to defer to what the larger biopharma manufacturers out there are saying. They just have more exposure with the end customer than we do. And you read what they’re saying publicly. It it appears it’s blue skies from here in terms of their recovery in 2025.

And if you if you parse out what they’re saying, it’s specifically on the on the single use pieces, which is entirely what we produce. That’s leading the charge for them coming out of, you know, the last, say, two years that have been pretty difficult. But what what’s interesting for our business despite the the roller coaster of up during the pandemic and then down in in ’22 and ’23, If you look at the five year CAGR from 2019 to ’24, so through that whole cycle, we actually did grow at a double digit CAGR right in line with the long term trajectory that you’d expect. Again, it was just quite a roller coaster to get there.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Excellent. And just maybe margins. Biopharma was a COVID beneficiary. And I think in ’21, broader pumps and process solutions segment had 36% EBITDA margin. And as biopharma continues to grow, has anything changed structurally that would hinder the segment from returning to those margin levels?

Christopher Winker, CFO, Dover: You know, listen, I think we’ve we’ve talked about it. Biopharma is good margin. As it grows, it’s gonna help segment margins from a mix up perspective. We’ve got other growth businesses in there that are we love the margin profile. It’s accretive to Dover.

It’s lower than that. I think the ’21 comparison gets a little bit tricky because, you know, the mix was very it was fairly anomalous. You had the stock you know, the the the kind of stocking impact of bio probably being in you know, our product being in invested in ahead of kind of fundamental demand. And you also saw some of our other businesses in the portfolio have a muted a more muted demand profile. So listen.

As as bio grows, it’s gonna be a contributor of margin expansion to the segment. But I think that data point particularly in in in ’21 is a little bit a little bit anomalous just because of the skewing of the mix toward bio and some of the other businesses may be being a little more muted

Andrew Obin, BofA Multi-Industrial Analyst, BofA: from that. But fundamentally, as you model it, if you model the mix correctly, so if like for like mix, right, nothing not structurally, businesses have not changed much on a like for like basis.

Christopher Winker, CFO, Dover: No. Not on a structure. Yeah. It’s it’s purely kind of a mix. It’s purely a mix thing.

Right.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Excellent. Thank you. Maybe we can talk about CO2 systems. Can you explain Dover’s positioning in both Europe and The US for CO2 systems? How did you get into the business and what was the size in ’24?

Christopher Winker, CFO, Dover: Yeah. So we got into the business in Europe, and and the investment by the retails in c o two obviously happened in Europe First. I think we had I think we got into the business over a decade ago. So and and then, you know, as that market in Europe has matured, we’ve been able to kinda leverage the technology investment that that business made to help build what we believe to be the leading position in in North America as The US now and North America now goes through the transition to c o two. And it’s a it’s a it’s a regulatory driven transition, but it is also, you know, I think a lot of the retailers are finding it’s an economic driven transition as well.

It’s it’s a there’s a benefit for them to to execute that transition on their own business models. So we’ve been able to leverage kind of the the the the technology that we had in Europe to build our position in in in The US, and now this is obviously a a business that is, you know, growing at a double digit at a double digit clip and has a margin profile that is accretive not just to the segment, but to Dover as well.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: I’m sorry. Did you say how big it was in ’24? Yeah.

Christopher Winker, CFO, Dover: ’24, the total business across the globe is probably mid two hundreds.

Jack Dickens, Senior Director of Investor Relations, Dover: Yeah. It’s probably north of two fifty. And The US, I think eclipsed a hundred million last year. It’s growing well in the double digits.

Christopher Winker, CFO, Dover: Yeah. And the growth profile in The US is obviously Europe’s a more mature market. The growth profile is obviously skewed toward The US.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Right. And so you’re currently in the middle of rollout with a large retailer. A, how is that going? And B, what about the visibility and durability of growth beyond that one customer? We going to have a cliff?

How many pilots do you have? Because no good deed goes unpunished. Right?

Christopher Winker, CFO, Dover: Yeah. I mean, I think we believe this to have some runway.

Jack Dickens, Senior Director of Investor Relations, Dover: I mean,

Christopher Winker, CFO, Dover: like the transition is going to take place You know, we’ve we’ve talked about one large retailer, but quite frankly, we’ve, you know, we’ve we’ve done pilots and we’ve done, you know, story story models and refurbs with multiple customers. So I would say it extends beyond one or two customers. I mean, it’s we’re starting to get it out into the market with multiple customers. So, you know, we we think this has got a growth trajectory for a number of years because, again, I think it’s it’s, not just regulatory driven, but there’s there’s benefits outside of that as well.

Right.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Gotcha. And what about the current level of profitability? Are c o two systems accretive to overall Dober margins?

Christopher Winker, CFO, Dover: Yep.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: That’s a good answer. Maybe we can talk about clean energy. So you’ve made a string of acquisitions in the clean energy space, LNG in particular. What makes this an attractive end market in your view? And is the Trump administration energy agenda a positive or negative for your business?

Yeah. You know, we believe in kind of

Christopher Winker, CFO, Dover: the long term outlooks for the energy transition with LNG. You know, I think that it’s a place where we started the investment cycling back in in in ’21. We remain, I think, convicted in our belief that that’s a space that is that is a positive for us from a market tailwind perspective. We’ve got good technology. Again, it’s it’s you know, we talked about this a little bit with Secura.

The businesses that we have in that space are good Dover businesses. You know, the products that they sell are kind of high value mission critical type of projects. And, you know, I think we expect to retain a fairly strong position and grow a fairly strong position in the future, not just on the back of good market growth, but also our kind of technology position in that market.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: And how much I’ll ask about sort of the margin mix, but how much visibility, how much of a funnel do you have in this business? Do you have three months visibility, six months visibility, two year funnel, four year final? What metrics, because we hosted a dinner recently and I think there is some debate about what constitutes LNG visibility. Like how do you guys get comfortable with visibility on the LNG side? Yeah.

And we’ve got multiple product ranges.

Christopher Winker, CFO, Dover: So I mean, we’ve got different lead times and backlog lengths. But I mean, it’s it’s, you know, the visibility is in the discussions with the customer base and understanding their investment, their investment timing. I mean, I think there’s

Andrew Obin, BofA Multi-Industrial Analyst, BofA: who is your customer in this? Like, when you sell these LNG system, who would you sell them to?

Jack Dickens, Senior Director of Investor Relations, Dover: The the large national gas majors

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Okay.

Jack Dickens, Senior Director of Investor Relations, Dover: Okay. On the precision component side. Now you’re talking more, you know, the the it’s like midstream infrastructure providers, the actual turbine makers, things like that. You know, some of these turbines are sold out for several years now. So the visibility is quite quite good.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: And you’ve signaled clean energy, as you said, you’ve just referenced above average revenue and above average margin expansion. Any sense what the margins were last year and how do you see the margin trajectory?

Christopher Winker, CFO, Dover: Yes. The margin trajectory, I think, is driven not just by the revenue growth that we expect in that business, but we’re also as we’ve done, I mean, handful of acquisitions really over the last few years, the opportunity for integration, the opportunity for kind of synergy cost synergy extraction is what’s driving those margins. I think the margins last year were probably mid upper

Jack Dickens, Senior Director of Investor Relations, Dover: upper teen. Yeah. In line with the segment. In in line with

Christopher Winker, CFO, Dover: the segment, and, you know, we have expectations to get those, I would say, well above well above 20. Mhmm. Yeah. I think

Jack Dickens, Senior Director of Investor Relations, Dover: the long term goal for both that segment and the clean energy portfolio overall is 25% margin.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Gotcha. And as long as it’s sort of in that ZIP code, can we talk about retail fueling? Know, sort of we’ve come down, you know, not as much in the news. Has this bottom sort of above ground, below ground? Can you just comment as to where we are in that cycle?

Yeah. I mean, we we’ve seen kind

Christopher Winker, CFO, Dover: of an encouraging start to the year from a demand function perspective in the below ground, and this is the business that, you know, the business that we have that, you know, competes to some degree with with Franklin. We’ve seen it. We’ve seen, I would say, a a better even than internal expectations start to the year. That’s been a business that’s been, you know, that struggled the last couple years from a demand perspective. So I think we’ve kind of gotten past some of the destocking and other things that we’ve we’ve talked about over the last couple of years.

So so we’ve gotten off to a strong start on below ground. I think our above ground business remains remains steady. So it’s you know, we’ve got a fairly positive outlook, I would say, for that for that part of

Jack Dickens, Senior Director of Investor Relations, Dover: the business for this year.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Does this administration will have any impact, do you think, on CapEx decisions for above ground? Or, you know, it’s just it’s it’s it’s on CapEx cycle and, you know, people just don’t really think about it that way.

Christopher Winker, CFO, Dover: Yeah. I mean, it’s it’s a fairly standard kind of replacement investment cycle Right. On both above and below ground side. So I think we we don’t see a reason that that’s gonna that that’s gonna change materially with with with this administration.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Gotcha. So but what would the catalyst be for the cycle to take on? Because we we should be getting now to the beginning of the replacement cycle. It’s been so long for the previous cycle.

Christopher Winker, CFO, Dover: Well, I mean, and and the replacement cycle extends. Right? It’s it’s not just a you know, it it extends over time. You know, they’re the whole on the above ground side, the whole EMV impact that we saw, you know, four and five years ago, we think there was probably some, you know, pull forward of demand based on that. And and Yep.

You know, I think, you know, we should be getting into by this point, I would say a more normal pattern in that business.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: So you do have sort of get something more exciting. You do have an area of triple digit growth and that’s thermal connectors for liquid cooling at data centers. A year ago, you thought it could be a 30,000,000 opportunity in ’24. So when do we finish the year and what do we expect for ’25 and what are you seeing?

Christopher Winker, CFO, Dover: Yeah. I mean, finished above the $30,000,000 number in ’24. So I think, you know, we saw strong growth last year. You know, the triple digit growth number that we referenced in the first quarter, you know, there’s a phasing element of that. If you look at that business in 2024, we really saw that business start to ramp in the second second quarter and into the second half.

So, you know, the the the triple digit growth rate that we saw in the first quarter, We’re not we’re not saying that’s a full year number, but the growth prospects are good, and and and it’s gonna be a a strong double digit growth year in in thermal connectors the the rest of the year. And, know, we remain excited about, the demand in that business and what we’re seeing and hearing from our customers.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: And is the demand driven? Is it a function of mega? Is it a function of electricity consumption? What’s sort of the underlying metric that drives that we should sort of, you know, when you model this business internally, are you looking at rack density? Are you looking at chip shipments?

Like what’s the one metrics that we should be looking to try to understand how fast this business should grow? Yeah. I mean, the I mean, it’s it’s correlating to kind

Christopher Winker, CFO, Dover: of the bill. I mean, right now, it’s obviously correlates it’s skewed heavily to correlating the build out of data centers and high performance computing. So how that kind of evolves in the long term kind of is maybe that that curve on buildup flattens. So that’s something, you know, we’re gonna spend more time on. Right now, it’s all project driven as we get these things.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: But I I I think as sort of NVIDIA transitions to GB 300 chip as you have Rubin chip, you know, probably being rolled out over the next twelve months. Clearly, much more energy intensive, much higher liquid cooling requirements. So I would imagine this continues to drive the business, and I would imagine you have plenty of visibility for design evolution. Right?

Christopher Winker, CFO, Dover: Right. And the and the transition, you know, the transition to higher energy or higher electricity requirements has obviously driven the shift from kinda air to liquid cooling. That’s been an accelerated an accelerant of demand.

Jack Dickens, Senior Director of Investor Relations, Dover: The interesting thing is is despite, I think, the visibility and the build out of the data centers, this has turned into a very short cycle business for us.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Interesting.

Jack Dickens, Senior Director of Investor Relations, Dover: Yeah. And and so what we do, obviously, is is ensure that we have adequate capacity and adequate inventory to make sure we have the the shortest lead times in the industry so we can continue to serve the customers and win share.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: And and who is your customer in that business? Is it Do you ship to Amphenol? Do you ship to NVIDIA? Do you ship to Vertiv? And I’m not asking you to name the customers, but just where are you in the supply chain?

Who do you ship to? Yeah. I mean,

Christopher Winker, CFO, Dover: we’re it’s somewhat like Bio. We’re fairly early on in the supply chain. And I think there’s different we have different kind of routes to market to where it ultimately ends up at the end. So we’re, you know, cooling system manufacturers. There’s some it goes through, you know, distribution.

So it’s a little bit of a mixed.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: So you would you would ship to somebody who builds a subcomponent for the cooling system. So somebody makes a CDU, I guess not a CDU, Not a CDU.

Jack Dickens, Senior Director of Investor Relations, Dover: Yeah. Direct to sweat. That would not change the subject, but,

Christopher Winker, CFO, Dover: yeah, the rack cooling.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Right. So inside the rack. So would you ship to, like, Hewlett Packard or would you ship to somebody who supplies to somebody like Hewlett Packard?

Christopher Winker, CFO, Dover: I mean, I would say it’s more of the latter than

Andrew Obin, BofA Multi-Industrial Analyst, BofA: the Okay.

Christopher Winker, CFO, Dover: I would say.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: Gotcha. Thank you. Yeah. And let’s talk remaining heat exchangers, swap heat exchangers. You know, I think it’s the second most expensive part of a liquid cooling unit, right, other than the pump.

One of the most important part inside heat pump. You have seen sequential growth in shipments and double digit growth in orders. So how excited should we finally be about this business in 2025? Yeah. Well, I think there’s some, I

Christopher Winker, CFO, Dover: think we are seeing some, we’ve obviously talked a lot in this business about specifically the European heat pump market. You know, there appears to be, and we kind of saw this, I would say maybe toward the tail end of the fourth quarter and and certainly in the first quarter, some parting of the clouds with respect to demand in European heat pumps just as as that channel works through what’s been a fairly sizable amount of inventory both on the finished unit, finished heat pump unit side and and component side. So I think we’re feeling positive. I think it’s it’s been more it’s been a we had a better quarter even than we expected internally. So I think we’re feeling we’re feeling positive about the trends on European heat pumps.

Obviously, there’s, you know, questions on on the trajectory of the recovery in that business and everything else. But I think that’s that’s a positive in that business. And then, obviously, you know, the opportunity on the CDU side of data center cooling continues to be a potential dry a driver of growth in that business as well as, you know, it’s not just data centers and heat pumps. There’s other, you know, district district energy and and HVAC and other markets that are we expect to continue to drive positive growth in that business.

Andrew Obin, BofA Multi-Industrial Analyst, BofA: We are out of time. Thanks so much.

Jack Dickens, Senior Director of Investor Relations, Dover: Thank you, Andrew.

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